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Questions to Ask in Selecting a Pharmacy-Benefits Manager

Questions from pricing to rebates, mail-order, and Internet sales.

January 8, 2002
Related Topics: Benefit Design and Communication, Health and Wellness, Compensation

nce you've identified the PBMs that appear to be able to meet your needs, you'll want to find out exactly what their capabilities are so that you can compare them and select the most suitable candidate. Following are some categorized questions to ask during face-to-face meetings once you've narrowed the candidates down to two or three. Remember to try to ask questions that require more than a "yes" or "no" answer.


  1. Please describe your network options -- particularly the ability to use more than one network. For example, use of a limited network in our primary service area and a broader network elsewhere.

  2. Please describe how you administer front-end deductibles and percentage copayments online, integrating mail and retail. Please address how you administer deductibles that are combined with major medical.

  3. Please describe your mail-order system. Please describe your process if we select a different mail-order vendor.

  4. How often do you perform on-site pharmacy audits? How many on-site reviews do you perform a year? What percent of the network does this represent? Please describe the audit process and the distribution of any recoveries.

  5. Please identify which Internet pharmacies you make available. Can you accommodate others? Describe how.

Claims Adjudication

  1. Please describe your claims adjudication processes, both online and paper submissions. What is your turnaround time on claims payment for each of these processes?

  2. Please describe what services are included in the claims administration fees.

  3. How often are your clinical DUR files updated?

  4. How often are your AWP and MAC prices updated?

  5. What is the turnaround on eligibility update files? How soon will the data be available for claims processing?

Utilization Management and Reporting

  1. What online edits do you support? Are pharmacists able to submit diagnosis codes, when provided, to satisfy prior authorization criteria?

  2. Identify specific drugs or drug classes for which you recommend special limits or controls (for example, psychiatric drugs, high-cost/high-tech drugs, smoking cessation, Retin-ATM, growth hormones, birth control pills, fertility drugs, DESI and injectables other than insulin).

  3. What quality or cost-improvement initiatives do you administer with regard to physicians, pharmacies, patients, and products?

  4. Please describe how you influence provider/prescriber behavior.

  5. What performance guarantees do you provide? What percentage of your fees are you willing to put at risk for your clinical utilization activities?

  6. Please describe our report options, what is contained in each, and the extent of your role in helping us to monitor our prescription benefit trends (price, utilization, therapeutic mix, etc.).

Formulary and Rebate Management

  1. Please describe your formulary process -- how drugs are selected, by whom, how often it is updated, etc.

  2. Please describe your ability to manage a customized formulary (one of our design).

  3. Please describe how you communicate the formulary and any midyear changes to the formulary to physicians, pharmacists and our employees.

  4. Please describe your rebate process -- how you track utilization, how and when you submit utilization to manufacturers, how and when you distribute rebate monies.

  5. What rebate guarantees are you providing?


  1. Please describe how the net price of the prescription is calculated -- the discounts for brand and generic, the dispensing fees, etc. -- in retail and in mail.

  2. What percentage of your claims is typically paid below the discounted network price?

  3. Please describe how your maximum allowable cost (MAC) list is developed, including how the cost limits are set.

  4. What reimbursement is made to Internet pharmacies--retail, mail, other? Please describe.


  1. Please identify your fees for the various services you provide: claims administration, utilization review, formulary management, etc. Please specify how the fees are structured: PMPM, per claim, per enrollee, or flat annual fee.

Patient and Provider Compliance

  1. Please describe your patient compliance program. What interventions do you perform? What evidence do you have of the program's success?

  2. Please describe your physician-profiling program. What interventions do you perform? What evidence do you have of the program's success?

  3. What health management programs do you offer? Please describe one program in full. What evidence of success do you have?

Reprinted with permission from "Managing Pharmacy Benefits" by F. Randy Vogenberg and Joanne M. Sica, Copyright 2001, International Foundation of Employee Benefit Plans, Brookfield, Wisconsin. All rights reserved.

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